Shell remains positive on LNG Canada

Though LNG Canada has been postponed at least twice, Shell’s chief financial officer Jessica Uhl said last week that the future of the Kitimat facility was still under study.

“LNG Canada looks very promising and together with our partners we need to finalise consideration of a few key items before we can take a positive final investment decision [FID],” she said during the company’s second-quarter conference call.

“We see great opportunities but we also have clear expectations when it comes to competitiveness, affordability and returns. We have an attractive portfolio of new supply options … [and] want to select the most competitive source of supply. LNG Canada is the most mature of these options.”

If built, the project would eventually ship up to 28 million tpy of gas to markets in Asia, which currently account for 72% of global LNG demand, with that amount projected to increase to 75% amid rampant Chinese gas demand.

Owing to its location on Canada’s west coast, the project’s shipping distance would be the shortest distance for LNG exports from North America to the Asia-Pacific region by several days.

In early July, Houston-based Civeo was awarded a contract to supply temporary work camps at four locations along the Coastal GasLink pipeline from Dawson Creek, British Columbia, to the West Coast, on the condition that the LNG export terminal was being built.

However, Uhl said that the company was still doing its homework. Shell must first establish the resilience of LNG Canada and that it can generate positive free cash across a “range of commercial and energy transition scenarios.”

The LNG Canada consortium – owned by Shell, Mitsubishi, Petronas, PetroChina and Korea Gas Corp. (KOGAS) – is expected to make an FID by the end of 2018.